Friday, February 27, 2009

Iggy In Edmonton

Here's a full transcript of Ignatieff's speech today, in front of the Edmonton Chamber of Commerce. An interesting read for sure, this speech and the presser that followed, offer a few tidbits on future Liberal environmental policy.

What struck me was the following, and it's an extension on what Ignatieff has argued before:

"Albertans are wary of any measure that looks like an extraction device from politicians down east. Clearly, you want to recycle the revenue that you get from a cap-and-trade system to incentivize green technology investment in the province of Alberta."

When Ignatieff first proposed a carbon tax, it came with a provincial component, wherein any revenue generated was returned to the jurisdiction in question. I always thought this a clever distinction, because it eliminates any notion of an eastern power grab. Ignatieff now uses the same formula under a cap and trade, which again should make the overall goal of cutting emissions more attractive to provinces with high output, because the citizens know that money will be redirected to encourage "green" projects in that province. One of the major problems with any national framework, this sense that provinces like Alberta will suffer, we will see a transfer of wealth to other parts of the country. I like this idea, because it removes the irritant, as well as applying pressure on the resident population to walk the walk. This idea, proposed by Ignatieff is "sellable", and it demonstrates a sensitivity.

I must say, I also liked the following characterization:

Ignatieff warned, however, that the controversial megaprojects that have sprung from the oilsands must become greener.

"We're operating this thing like it was the Klondike, and it's not the Klondike. We're going to be there for a century or more.

If you accept the premise that oil reserves will be developed, it isn't realistic to believe any economy would simply leave a valuable resource in the ground, then the above has some attraction. With what we know of human nature, how the world works, it's hard to entertain a complete shutdown, based on environmental considerations alone. Fatalistic, but realistic by any measure.

The current economic climate has done much to slow down development in the tar sands, the exponential surge in production people were predicting mere months ago has been considerably revised. When you consider the fact that the tar sands are effectively money in the bank, just a question of when to make the withdrawal, then the idea of the Klondike is a shrewd analogy. I've always argued that the "hell bent for leather" approach of the Alberta government didn't address a simple fact- you don't need to take it all now, it can be in done in such a way to provide reasonable, steady growth, without sacrificing everything else in the process. Ignatieff seems to be arguing for a slower approach, a long term view, which would be a welcome development in this debate. It's not like this view doesn't have proponents in Alberta, people like Lougheed and others have been arguing for a more sustainable, reasonable growth model for quite some time.

Making no bones about hard caps, provides a point of distinction. While the visit seems to be more of the same on the pandering front, which I've never necessarily disagreed with, Ignatieff, or more rightly the coverage of Ignatieff, looks to be more balanced.

Not to leave it on a sour note, but there's no way Ignatieff can actually believe this line:

Companies in the oil sands are calling for a price on carbon themselves.

Companies operating in the oil sands get it – they get that they’re leaving behind a legacy for our children and the environmental impact of their projects can’t be ignored.

Please, amoral multi-nationals only care about profit, any recognition of consequence or measures taken, are only done so because they are demanded by the political climate. Within that climate, these entities will do the bare minimum allowed to look credible, to remain viable in the public eye. Huge corporations don't have souls, I think we've seen this simple fact in spades recently, it's more about appeasing, than worrying about the "children". I'll see if I can get the photo of Ignatieff with his fingers crossed behind his back, when he uttered the above :) Smooth.

I still think the carbon tax is the best policy, but if you'll recall cap and trade was always part of the mix. I never railed against it, just the notion that it's superior. In fact, I argued you could do both. Anyways, I'm not into to political suicide, the Liberals can't run on it right now, it's a simple as that. The concept is death for the time being.

Not only is Obama putting a carbon tax in his budget that raises almost 10x more money than the Green Shift (which makes sense given they are 10x the population), but a carbon tax is something the oil sands favours too. (see here - yes the link is over a year old but I'm sure the oil industry support for the measure remains).

Ignatieff could be out there holding press conferences with oil execs promoting it for all I care, it's the right approach. Everyone who's thought seriously about it knows it.

Obama has changed the dynamics here that can't be denied - we should adapt accordingly - we won't be punished for following a guy with 80% approval ratings here. Hell maybe Obama could come here and make a pitch for harmonization of environmental policies and sell his version of the carbon tax for us.

There are some areas, those that Iggy is speaking to, that are closer to views in the US than to eastern or central Canada.

Many people in Western Canada see government as a nuisance, not an answer. They are wary of centrally controlled media and nationalized economic policies. These are more typically associated with American values than those found in eastern Canada. The dismissal of the western Canadian reality by people like Mark Holland, Stephane Dion, and Wayne Easter drives a wedge between the Liberal Party and the West.

You made a statement, "We think much more like American's than eastern Canadians."

And it's true. As much as Steve thinks it's an "ignorant" statement doesn't change anything.

Couching it in, "Many people in Western Canada see government as a nuisance, not an answer. They are wary of centrally controlled media and nationalized economic policies.", doesn't make the original statement untrue.

All you do in the later explanation is accuse easterners of nanny state desires.

Jim, I don't think it is correct to say Obama is proposing a carbon tax. His budget contains a cap and trade and sells credits to emitters to generate income which is used partially to offset the expected price increases for low and middle income.

Some Republicans are calling it a carbon tax because they want to kill it. And there is still a push from some for a real carbon tax with more price certainty. Obama has advisors who understand the advantages of a carbon tax, but, for the moment, Obama appears to be standing firm on cap and trade. Perhaps that will change. In any case, I expect the cap and trade to be designed to mimic a carbon tax as much as possible.

You're the one with the chip on your shoulder. And, it denotes complete ignorance- get out more!

Jim

We can follow the Americans lead, if they propose some kind of carbon tax. That doesn't mean the Liberals should initiate anything. It's a complete political no-brainer at this point, and like I've said before, if you don't believe me, just watch the Con war room SALIVATE at the mere mention. It's just crazy.

RuralSandi, Is it the economy or politics? Economic concerns would push one toward the price stability of a carbon tax. However, cap and trade will not kick in until 2012, so there is a long grace period. It will take that long to set up a well-designed cap and trade, whereas it would be difficult to argue one should wait that long for a carbon tax. Maybe the delay makes it more palatable in this economic time.

NYT is still implying the reason for cap and trade over carbon tax is political:

Some economists support Mr. Obama’s approach to curbing emissions because they say the other main alternative, a tax on polluting fuels, is politically unpopular.

But others warn that a cap-and-trade bill could produce great volatility in permit prices and drive up energy costs.

“It’s much easier for me to think of scenarios where cap-and-trade goes crazy, prices fluctuate like mad, and people get turned off,” said Martin Weitzman, a Harvard economist. “That could end up discrediting the system for a decade or a generation.”

I expect the US cap and trade to have safety valves and such to dampen price fluctations.

Steve, I can't speak to the Tar Sands and the oil companies, but there was as famous story of the oil companies begging the Blair government in Britain for a pricing mechanism for carbon. They argued that unless the government did something to force all companies to take the cost seriously, competitive pressure would force them to ignore the problem. In effect, they were begging for regulation because they themselves saw carbon as a case of market failure. The sad thing is the Blair government turned them down because it did not want to put British oil at a disadvantage. So, while I share your distrust of big oil, it is unfair to say that they are completely unsympathetic to the problem of carbon pricing.

That's simply a economic, competitive consideration, nothing to do with legacy or "families", nothing that has anything to do with responsible conduct, based on a moral equation. What you presented is a further statement on self interest, if carbon pricing works for THEM, then they'll see merit. Nothing more, nothing less.

Catherine: The NY Times calls Obama's proposed emission credits "pollution surcharges". The Miami Herald and Boston Globe flatly call it a carbon tax. As do others.

Don't polluters pay exactly the same through these credits as they would through a tradional "carbon tax"? Explain to me the difference in terms of what companies pay directly into government coffers?

In my view if you have to pay $1 million in taxes for a certain amount of pollution that's no different than having to buy $1 million in credits directly from the government for the same amount of pollution. It still raises the same amount in revenue for the government for the same amount of pollution.

Obama can play semantic games and I guess he's smart for doing so, but I think we know that his budget proposed something VERY similar to the Green Shift.

So then a carbon tax IS in his budget bill that's ALREADY been put to Congress. If it passes I say we follow his lead.

Steve: I agree with you, no point in Liberals initiating it, but I think we'd be foolish considering it's good policy not to follow Obama's lead if his "pollution surcharges"/carbon tax scheme (combined with equivalent tax cuts and investments in renewable energy) becomes law because it's 90% the same as the Green Shift we ran on in the last election.

“Let’s just be honest and call it a carbon tax that will increase taxes on all Americans who drive a car, who have a job, who turn on a light switch, pure and simple,” said John A. Boehner of Ohio, the House Republican leader. “And if you look at this whole budget plan, they use this carbon tax as a way to fund all of their big government ideas.”

It's like the Republicans have stolen quotes directly from Stephen Harper's mouth. They are even calling a "permanent tax on everything". But they are right when they say it's a carbon tax dressed up with fancy words, but I can't help but wonder if we shouldn't have done the same thing.

Thankfully Obama is just LIGHT YEARS more popular than any Liberal leader ever has been so there's nobody better to ensure this version of the Greeen Shift succeeds.

It would seem as well that the first year price of the emission credits will be at least $10 a ton of carbon which makes it IDENTICAL to the first year price of the Green Shift plan.

It's still unclear when Obama will start selling the credits though, it says consumers "won't feel a hit" till 2012 but that doesn't mean it won't start till then only that the carbon permits will only have a noticeable impact on prices at that point. The Green Shift was designed the same way. But I guess I haven't read Obama's budget documents so maybe it actually spells out that the system won't start till 2012. But really he could start selling permits in advance of then if he wanted to.

Jim, cap and trade and carbon taxes are in a general sense the same. But in cap and trade, industries will trade permits (or credits) on a market which will fluctuate in price according to supply and demand. Obama plans to sell all credits (rather than give them away) but what a company actually pays that year will depend on what happens to the carbon market. NYT used that phrase in talking about the sale of the credits (because it does bring revenue to the government) but, they acknowledge, it is still a cap and trade system, not a carbon tax.

My read of the budget coverage is that the government will only start getting revenue in 2012, so I take that to mean that the first carbon credits will be sold that year.

Ok thanks Catherine. So if Obama fixed the price of the credits sold at a certain price each year (say $10 a ton the first year, $20 a ton the second year, etc...) then it would be exactly the same then as what the Green Shift proposed here.

By the sounds of the NY Times article he may very well be under pressure to do exactly that then rather than let the permit prices fluctuate wildly.

If he fixed the price he could sell them a lot sooner than 2012, but I guess 2012 is kind a political marker because he wants to get elected for a 2nd term.

Either way I hope the Liberals endorse his general approach and still adopt a modified Green Shift in the same manner Obama has in his budget once Liberals win the next election.

Yes, Jim, they are roughly the same as far as money flowing to the government.

To industry and consumers, they are not necessarily the same because, after the initial price paid to the government, industries will be selling and buying permits on the market, and then passing on actual costs to consumers.

The initial permit price soon gets overtaken by trading on the carbon market, which is more strongly tied to the quantity of permits and the actual cost to companies of reducing their carbon emissions. Carbon markets are complex and the permit price can either plummet (as it did in the EU) or rise dramatically.

I am sure Obama will design the cap and trade to reduce price fluctuations, but you cannot eliminate fluctuations completely in a cap and trade system. That is the big difference from a carbon tax where the price is completely fixed.

Ok but Dion had promised to set up cap and trade in combination with a carbon tax too so when the two systems operate together a carbon tax has the same effect as a sold permit.

It just seems Obama is waiting for cap-and-trade before selling the permits that essentially act like a carbon tax.

Well hopefully Obama faces presurre to start selling the permits sooner before the carbon market is set up. I could care less if he calls it a tax as long as it's having the same effect of putting the exact same price on pollution as a carbon tax would have while raising equivalent revenue for the government for a tax shift.

I'm willing to bet I've seen a hell of a lot more of this country than either you or narrow guy lance every will. And, I didn't just drive by either. All these ignorant generalizations, wherein said individualy projects their own narrowness, is pretty sad. Small worlds.

If you have seen what you claim to have seen then you would understand differently the mindset of the west.

People in the west do not feel like an equal partner in confederation. Ontario, Quebec, and the maritimes all seem to be getting better deals.

When the plow horse looks behind and sees the other farm animals sitting around eating the product and making dumb remarks, it tends to piss the plow horse off. That is how the Liberal party is perceived. It simply doesn't exist in western Canada as a provincial entity (remember the BC Liberals are actually mostly Conservatives). And as the results of the last pile of elections show, it doesn't exist as a Federal force either.

As I said, move to Melfort, work there for a couple of years and breathe the air.

Just a follow-up. Why is that I can't find anything on this wow of a fundraiser last night? I don't dispute, I heard 600 sold earlier this week, but the party should be releasing a press release, photos, something. The silence is disappointing to say the least. You can't beat the imagery of a packed room, and you also can't expect others to make news for you. Politics 101 from here.

Listen Tomm, I've lived on the coast, and I've lived in the eastern interior, a rural environment, that was also a haven for Albertans. You are no better versed than I to speak on sentiment, I know it well and your monolithic view is almost comical. If you guys want to preach, like I'm some easterner, fine, but I'm pretty comfortable saying my perspective is far wider than what you keep telling me.